South African Virtual Card Maker Adjusts Its Model for U.K., U.S.

A South African payments company has established a consumer-facing subsidiary in London to enable its worldwide expansion over the next few years.

The company, Net 1 UEPS Technologies Inc., has been active primarily in emerging markets as a third-party payments provider to businesses and government agencies. Its new London-based subsidiary, Zazoo, is a way for the company to develop and sell its products directly into retail markets anywhere.

"We want to reposition ourselves in the market as pretty much what we believe we are, which is a young, vibrant business with great technology," said Philip Belamant, Zazoo's managing director.

The company's immediate focus is Europe, and it already has plans for the U.S. as well.

Its first foray likely will come in the form of mobile virtual cards: single-use credit cards that can be delivered to mobile phones and used to pay for goods online and in stores. Consumers can add funds to the cards by linking their existing credit or debit cards.

Zazoo's parent, Net1, offers a similar product called VCPay, which it launched in 2010. The new version will boast more features, including the ability to share and send cards via social media sites such as Facebook and WhatsApp, Belamant said. The cards also will incorporate biometric security.

Zazoo recently began offering the cards in South Africa, and is looking to bring them next to the U.K., with the U.S possibly to follow later this year, Belamant said.

"The product is ready," he said. "We are actually just deciding how and when to go to market."

The cards should appeal to immigrants who can use them to send money home, Belamant said. Recipients can withdraw cash at a point of sale terminal, for example.

"All of this would happen seamlessly, and it would happen at a fraction of the price of Western Union," Belamant said. "We really think that remittance is a big space that we will focus on in America."

The security-conscious, meanwhile, can use the cards online to pay for goods without exposing their actual credit card numbers, Belamant said.

Consumers will pay a small fee per month or per transaction. Belamant declined to say how much, noting the cost would be "nominal."

"We want this to be used and not cumbersome," he said, adding the fees could be offset if the product is taken up and branded by banks under a white-label arrangement, as India's Axis Bank is doing.

Other products may follow from Zazoo, depending on the evolution of the payments landscape in the U.S.

One could be a smartphone app that produces temporary PINs for consumers to use in chip-and-PIN transactions. The app is already used in Europe, Asia and Africa, Belamant said. In the U.S., the app's relevance depends on whether enough banks require a PIN.

Another product, Belamant said, focuses on mobile payments.

"We think we've come up with something that we think will be truly unique in the mobile payment space," he said, declining to be more specific. "We will definitely be launching and talking about it in the coming months."

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